Higher GST and excise duties raise prices and fuel inflation; balanced tax policies help control long-term inflation.
This infographic explains how various taxes influence inflation in India. Indirect taxes like GST and excise duties increase costs for businesses, which are passed on to consumers, raising prices. Higher corporate taxes can also increase production costs. Changes in income tax affect disposable income and consumer spending, influencing demand and inflation. Fiscal policy decisions on tax rates impact the money supply and price stability. Strategic reforms, such as reducing taxes on essentials, help control inflation and ensure economic stability.